ASX chief not concerned about high frequency trading

Business reporter

"Here, the behaviour of HFT is more aligned with the broader market. And as a result, we have few concerns at the moment.": ASX chief executive Elmer Funke Kupper. Photo: Dean Sewell

ASX chief executive Elmer Funke Kupper has played down the threat of high frequency trading in Australia and called again for the government to review its 15 per cent ownership restrictions on the local bourse.

Speaking at a stockbrokers' conference in Melbourne, Mr Funke Kupper said while Michael Lewis' new book, Flash Boys, was "all true", high frequency trading did not exist in Australia "on the same scale or with the same impact" as it does in the United States.

"In Australia, our regulators have made sure that the interests of end investors are prioritised," Mr Funke Kupper said.

"The aggressive strategies prevalent overseas are uneconomic under Australia's regime.

"Here, the behaviour of HFT is more aligned with the broader market. And as a result, we have few concerns at the moment."

Mr Funke Kupper's comments echo those by the corporate regulator, the Australian Securities and Investments Commission, earlier this month, which said the situation in Australia did not match the "hype" following the release of the book.

Mr Funke Kupper said restrictions around on maker-taker pricing, regulatory fees and tick sizes helped keep the problem at bay in Australia.

"ASX will continue to advocate regulatory settings that support investors and long-term market quality," he said.

Mr Funke Kupper also raised the issue of the 15 per cent ownership restrictions on the local bourse, saying it was out-dated.

"This limit provided additional protection when the regulatory settings were less well defined," he said.

"Now that the controls around our financial infrastructure have been significantly tightened, one could argue that the ownership limit is no longer required. None of ASX's main global competitors are subject to an ownership limit."

The ASX has been pushing for a review of the ownership rules as part of its submission to the financial system inquiry, headed by former CBA boss David Murray.